Small Biz Owners Clueless on PPA

A recent poll of 507 small business (companies with 50 employees or fewer, including one-person, owner-operated businesses) owners or CEO’s/Presidents commissioned by ShareBuilder 401(k) found that many small business owners are still focusing on Social Security as a primary source of retirement income, both for themselves and their employees.
A majority of those surveyed (61%) had never heard of the Pension Protection Act (PPA). Not surprisingly, small business owners were much more likely to be concerned with running their company than legislation that, most likely, in their opinion, does not have significant applicability.

 

Even Aware Unmoved

 

Of the 39% who were aware of the PPA, 76% said it has no impact on their plans to offer a 401(k) plan to their employees, according to a news release on the survey. However, while the permanency of the expanded contribution and benefit limits under EGTRRA do make some aspects of offering a retirement plan more advantageous for small business owners, this might not be the best selling point for this audience. Consider that a mere 25% said they plan to use a 401(k) to fund part of their retirement income, possibly because these owners have private savings, or plan to use the money from selling their business as retirement income.

Less than 40% of small business owners offer any form of a retirement program to their employees and only 14% of the respondents currently offer a 401(k) plan to their employees – an obviously untapped market for advisers to prospect. Advisers can help small business owners understand the importance of company-sponsored 401(k) plans and other retirement benefits in supplementing our Social Security system.

For employers who don’t want to offer a 401(k) plan to employees, advisers can help them review the many other retirement plan possibilities that might better suited for their workforce, including defined benefit plans and IRA based programs.

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